Goodwill and Other Intangibles

9 Months Ended

Sep. 30, 2022

Goodwill And Intangible Assets Liabilities Disclosure [Abstract]

We have recorded lease, internal-use software development, and trade name intangibles that are being amortized over periods ranging from less than one year to 48 years. In-place lease intangibles, at cost are included in In-place lease intangible assets and other in the consolidated financial statements. Above-market rent intangibles, at cost are included in Above-market rent intangible assets in the consolidated financial statements. Accumulated amortization of in-place lease and above-market rent intangibles is included in Accumulated depreciation and amortization in the consolidated financial statements. Internal-use software development and trade name intangibles are included in Other assets, net in the consolidated financial statements. Below-market rent and below-market purchase option intangibles are included in Below-market rent and other intangible liabilities, net in the consolidated financial statements.

Net lease intangibles recorded in connection with property acquisitions during the nine months ended September 30, 2022 are described in Note 5. In connection with the CPA:18 Merger (Note 3), we recorded net lease intangibles comprised as follows (life in years, dollars in thousands):


	Weighted-Average Life	Amount
Finite-Lived Intangible Assets
In-place lease	7.4	$	199,913
Above-market rent	11.9	61,090
		$	261,003

Finite-Lived Intangible Liabilities
Below-market rent	8.5	$	(16,836)

In connection with certain business combinations, including the CPA:18 Merger (Note 3), we recorded goodwill as a result of consideration exceeding the fair values of the assets acquired and liabilities assumed. The goodwill was attributed to our Real Estate reporting unit as it relates to the real estate assets we acquired in such business combinations. The following table presents a reconciliation of our goodwill (in thousands):


	Real Estate		Investment Management		Total
Balance at January 1, 2022	$	872,195	$	29,334	$	901,529
Acquisition of CPA:18 – Global (Note 3)	172,346		—		172,346
Foreign currency translation adjustments	(21,370)		—		(21,370)
Impairment charges (Note 9)	—		(29,334)		(29,334)
Balance at September 30, 2022	$	1,023,171	$	—	$	1,023,171

Current accounting guidance requires that we test for the recoverability of goodwill at the reporting unit level. The test for recoverability must be conducted at least annually, or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. In connection with the completion of the CPA:18 Merger in August 2022 (Note 3), we performed a test for impairment during the third quarter of 2022 for goodwill recorded in both segments and recognized an impairment charge of $29.3 million on goodwill within our Investment Management segment (Note 9).

Intangible assets, intangible liabilities, and goodwill are summarized as follows (in thousands):


	September 30, 2022						December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Finite-Lived Intangible Assets
Internal-use software development costs	$	19,700	$	(19,040)	$	660	$	19,553	$	(18,682)	$	871
Trade name	—		—		—		3,975		(3,581)		394
	19,700		(19,040)		660		23,528		(22,263)		1,265
Lease Intangibles:
In-place lease	2,449,354		(983,045)		1,466,309		2,279,905		(934,663)		1,345,242
Above-market rent	840,943		(496,376)		344,567		843,410		(489,861)		353,549
	3,290,297		(1,479,421)		1,810,876		3,123,315		(1,424,524)		1,698,791
Goodwill
Goodwill	1,023,171		—		1,023,171		901,529		—		901,529
Total intangible assets	$	4,333,168	$	(1,498,461)	$	2,834,707	$	4,048,372	$	(1,446,787)	$	2,601,585

Finite-Lived Intangible Liabilities
Below-market rent	$	(286,446)	$	118,272	$	(168,174)	$	(272,483)	$	105,908	$	(166,575)
Indefinite-Lived Intangible Liabilities
Below-market purchase option	(16,711)		—		(16,711)		(16,711)		—		(16,711)
Total intangible liabilities	$	(303,157)	$	118,272	$	(184,885)	$	(289,194)	$	105,908	$	(183,286)

During the nine months ended September 30, 2022, the U.S. dollar strengthened against the euro, resulting in a decrease of $96.7 million in the carrying value of our net intangible assets from December 31, 2021 to September 30, 2022. Net amortization of intangibles, including the effect of foreign currency translation, was $62.1 million and $55.2 million for the three months ended September 30, 2022 and 2021, respectively, and $165.6 million and $166.9 million for the nine months ended September 30, 2022 and 2021, respectively. Amortization of below-market rent and above-market rent intangibles is recorded as an adjustment to Lease revenues and amortization of internal-use software development, trade name, and in-place lease intangibles is included in Depreciation and amortization.